Argentina on The Brink

Dr. Sennholz heads the Department of Economics at Grove City College in Pennsylvania. He’s a noted writer and lecturer on economic, political and monetary affairs.

In many respects Argentina moves ahead of other Western countries. While the U.S., Great Britain, France, Italy, and others suffered double-digit rates of inflation in recent years, the government of Argentina managed to inflate its peso at triple-digit rates. In the U.S., experts estimate that underground economic activity has risen to some 10 to 15 per cent of national income; in Argentina it is estimated to exceed 50 per cent. In the U.S., smuggling is limited by and large to the illicit importation of large quantities of narcotics and medicines; in Argentina it probably covers the whole range of moveable goods. In the U.S. political terrorism, which is the use of violence and intimidation to achieve political ends, led to 1313 bombings in 1975, killing 69 people and injuring 326. At the same time and for the same reason Argentina suffered the armed aggression of terrorism and Marxist guerrillas that killed more than 1,000 people and left scores injured and mutilated. It defended itself from an organized onslaught of international communism without the help of any friendly power.

Argentina, like so many other countries in the world, suffers from a puzzling discrepancy between economic potential and political reality. The country is graced with natural resources that surpass those of most other countries of the world. Its greatest asset is the economic spirit of the people, their will to win and their courage to work. But Argentina also has become a synonym for political instability and government mismanagement. Since 1930 there have been more than 20 presidents, only two of whom completed their elected terms. Some were constitutionally elected, others appointed by military juntas. All contributed to the political disorder, to social factionalism and economic disintegration. Most recently, the junta waged a popular but ill-fated foreign war and, as if it were bent on suicide, reacted to the debacle by applying the most destructive policies conceivable.

European Roots

Argentina is by far the “most European” country in Latin America, with 97 per cent of the population of Spanish, Italian, British and German ethnic origin. Large-scale European immigration in the decades after 1880 reaffirmed the European ties, spurring modernization and development. European intellectual thought has had, and continues to have, a pervasive influence on Argentine political, social and economic life. The turbulent history of Argentina remains incoherent and perplexing unless it is related to European intellectual thought.

In its formative years Argentina, like Europe during the 19th century, was torn by conflicting philosophies on the nature of government and its constitution. Influential groups sought to establish a monarchical government until they were defeated by others who favored a republican form. Violent disagreement continued on whether it should be centralized or federal. The constitution of 1853, modeled mainly on the Constitution of the U.S., sought to forge a compromise between the two. But despite all the political conflict and strife, economic freedom prevailed throughout the country. With the aid of foreign capital and technology economic production expanded by leaps and bounds. Railroads were built, agriculture and commerce prospered, fostering a rising tide of immigration.

During the 1890s two new political parties, which were to play important roles in the future, derived great strength from the new Spanish and Italian immigrants. The Radical Civic Union, often called the Radical Party, appealed to all social classes for social reforms, especially on behalf of labor and labor unions. The Socialist Party, whose doctrinal roots were clearly Marxian, limited its appeal to a single class, the workers. It did not gain mass support even in its stronghold, Buenos Aires, until World War II.

The Radicals coming to power in 1916 conducted economic policies of far-reaching government intervention, which, in U.S. parlance, gave Argentina its “New Deal.” It led to economic confusion and social upheavals and fostered anti-democratic sentiment that was coming from abroad. During the 1920s Argentineans began to admire the Italy of Mussolini, the Spain of Primo de Rivera, even the Russia of Lenin. And the military sensed a new mission to regenerate the nation it thought debased by inept and corrupt parties and administrations. It struck in 1930. Genera] José F. Uriburu, who had been converted to Fascist ideas, overthrew the Radical regime in a military coup. But lacking popular appeal and support by a large part of the army, he soon had to yield the reins of power to an elected conservative administration which conserved the New Deal and busied itself with full-employment and economic recovery measures.

The Peron Years

Recent Argentine history begins with Juan Domingo Peron who, in 1943, with a group of government officials and a military junta, overthrew the conservative government. Elected president in 1946, he set out on a course of nationalism, socialism, industrialization, and anti- U.S. agitation. He nationalized the banks, the railroads, and other utilities, and embarked upon public works on a large scale. He squandered the capital substance accumulated in the past and, upon its depletion, engaged in massive currency and credit expansion. He commanded the army, the police, the labor unions, and his Peronista party, which permitted him to dictate the political life of the nation. He eliminated most constitutional liberties, such as free speech and free press, and ruled supreme until he was overthrown by an army-navy revolt in 1955. Thereafter, the country oscillated between military juntas and elected governments that did little to dismantle the Peronist system. Peron returned to power in 1973, died in 1974, and was succeeded by his wife Isabel. In the face of widespread unemployment, severe shortages, riotous inflation, civil strife, and bloody raids and assassinations by terrorists, the military returned to power in 1976.

The War Against Terrorists

The bloodless coup of March 24, 1976, was welcomed by most Argentineans, living precariously between the terrorism and kidnappings of rural and urban guerrilla organizations and the fascist Alianza Anti-communista Argentina. “Death squads” were executing hundreds of their political enemies and threatening to kill more. The Marxist-Leninist Montoneros were kidnapping eminent bankers and industrialists, including several U.S. citizens, murdering them when blackmail demands remained un-met or releasing them for staggering ransoms. They even mounted major attacks against the army and its arsenals. During Isabel Peron’s 21 months in office political violence was responsible for some 1700 deaths.

The primary goal of the new government was the eradication of terrorism and subversion. It established the death penalty for political murder and launched a massive campaign against guerrilla strongholds. By the end of 1978 it had crushed most terrorist forces and restored law and order throughout the country. The junta had earned the gratitude of nearly every Argentinean and was riding high in esteem and popularity.

International critics of the regime denounced the campaign against terrorism as a countercampaign of violence against individuals considered subversive, and pointed at evidence of torture and arbitrary arrest. In its first 12 months in office the junta was accused of having killed 2300 persons, held as many as 10,000 in prison for political reasons, and caused between 20,000 and 30,000 to disappear. The government promptly rejected the validity of these foreign reports, claiming that they were communist efforts to discredit it. It invited the Inter-America Commission on Human Rights of the Organization of American States (OAS) to investigate the allegations.

A Commission report was published in Argentina in 1980, and promptly rejected by the government for being “neither objective nor balanced.” The official answer given by President Videla did not clarify the situation, but tried to explain the reasons for human rights violations: there has been a “civil war” and “all wars are dirty.” His successor, General Viola, later clarified the junta position: as a basic condition for the restoration of a civilian government, there must be “no revision of what has happened during the fight against terrorism.” His minister of the interior added bluntly that “no victorious army was ever asked to explain its behavior during a war.”

Civilization Threatened

Objective observers who abhor violence in any form and by any party cannot escape the conclusion that political terrorism constitutes a declaration of war against society, which cannot exist without law and order. Terrorism, which is endangering the lives of countless people around the world, is more than unlawful activity by common criminals. It is a political movement that does not seek destruction for its own sake, but aims to destroy the private property order. It is organized communist aggression launched against the free world. If it is true that Western Civilization rests solidly on private property, then terrorism must be viewed as a war against civilization itself.

As the individual has the right of killing in self-defense, society has the right to wage war for its own preservation. But even if the terrorists violate all principles of virtue and commit heinous atrocities against humanity, the forces of law and order must not violate “due process,” i.e., fair procedure as to life, liberty and property. They must defend society in a civilized manner and, as guardians of civilization, act beyond reproach.

An Economic Debacle

In 1978 the junta was riding high in public acclaim and respect. Having restored law and order, it now could set about the restoration of the economic foundation of social cooperation which had been shattered by years of senseless destruction. A basic choice had to be made: to pursue the Peronist system, making it work with military order and discipline—or restore the competitive private-property order that is working so well in other countries of the West. The generals are not political economists, but having endured the chaos and corruption of the Peron regimes, they seemed to opt almost instinctively for the private property order.

Three junta presidents have since struggled with the crippled economy. They reduced the number of state-owned enterprises by a few hundred, recast some labor legislation, and banned the political activity by the powerful labor confederation. Piece by piece they sought to whittle away the excesses of the Peronist system and restore some moderation. All along they, like so many of our politicians, were talking in glowing terms about an early return to private enterprise under government supervision.

The military was deeply convinced of its historic mission to lead the nation to regeneration after so many years of party corruption and ineptitude. There was to be no return to civilian rule before the 1990s. But “to strengthen future democratic institutions” President Videla established a Ministry of Planning which, in consultation with various economic and intellectual sectors, was to develop a “national reconstruction plan.”

It would be difficult to distinguish the Videla plan of reconstruction from similar plans designed by Juan Peron, or for that matter, by any dictator anywhere in the world. It provides for more government planning, more ministries, more bureaus and bureaucrats, and more government power over the lives of individuals. His thought and language are those of Caesars who lack all understanding of the nature of freedom and a free society and who have lost all respect for humanity.

Surely, to facilitate a speedy economic recovery from the morass of radical government intervention is a difficult and demanding task. It would tax the ability and courage of any statesman and leader. But the Argentinian junta hardly made a beginning. In fact, it made matters worse by utterly destroying the Argentinian currency and by launching a disastrous war.

While the government was nibbling at labor unions because of their potential threat to junta power, it indulged in the worst inflationary practices seen in a generation. It doubled its quantity of money nearly every year and, in the end, enmeshed the economic lives of its people in the most stringent government controls. The exchange rate moved from 140 pesos to the dollar in 1976 to an estimated 15,000 to 1 in March 1982.

Incredible Ingenuity

Economic life in Argentina has never been more disrupted, distorted, and disorganized than it is today. If it were not for the incredible ingenuity and hard work of the Argentinian people who learned to survive on black markets and in the economic underground, using foreign money, especially U.S. dollars, human survival would be at stake. In the eyes of visitors from the U.S., the working people of Argentina are performing a miracle that deserves admiration.

The country is in the grip of its worst economic crisis in decades. Argentina has a record $39.1 billion of foreign debt and lacks the financial resources to meet the obligations falling due this year. The central bank is negotiating with foreign creditors seeking extensions and new loans to meet interest payments. In this respect Argentina has joined scores of underdeveloped countries in Africa and Asia.

The junta government has turned the Falkland Islands debacle into a national disaster more serious by far than that inflicted by the British troops. President Reynaldo Bignone, a retired army general, was named president on June 22 following a government shakeup. While main taining the old nationalistic position toward the Falkland Islands, he abandoned all pretense of return to a market order. He dismissed the brilliant economist, Roberto Ale-man, who was struggling to keep government expenditures under control, and appointed José Dagnino Pastore Economic Minister. Pastore promptly opened the floodgates of inflation, introduced multiple ex change rates, fixed interest rates, boosted all wages, and devalued the peso by 22 per cent. He thereby dashed all hopes for an early recovery.

The Falkland Islands War

War is a mad game some people love to play. It is nothing less than a temporary repeal of all reason and all principles of virtue. Surely, the Argentinian junta that ordered the military occupation of the Falkland Islands at the beginning of April reacted to a minor incident involving a small group of Argentinian workers on one of the islands. It reacted by landing a full-scale invasion and incorporating the islands into the Argentine state. But the junta completely misjudged the British reaction, which was swift and efficient in contrast to the Argentine military operation, which proved to be ill-planned, ill- prepared and ill-executed. The Argentine debacle illustrated again the old maxim that a military force that is preoccupied with running the political, social and economic affairs of a nation loses its ability to serve the purpose and justification for its existence.

The generals may have had urgent domestic reasons for their decision to occupy the islands. The country was sinking ever deeper into the morass of hyperinflation and economic disintegration caused by inept economic policies of successive junta presidents. The Peronistas and their labor unions were flexing their muscles, openly demonstrating against the military regime. Therefore, some diversion was needed to reunite the nation on a popular issue, and give the junta more time. President Leopoldo Galtieri gambled as a general—and lost.

It is especially sad that the junta adventure was applauded by the vast majority of the Argentine people. Even most intellectuals who otherwise observe and analyze Argentinian problems rather dispassionately, proudly acclaimed the return of “our Malvinas.” Their arguments in support of invasion invariably were taken from history: Spanish sailors discovered the islands, and “we” are the legitimate heirs to Spanish sovereignty.

A court of law surely would need to investigate the succession of claims. But man’s contemporary affairs are not shaped by distant history. In the name of history nearly every government may lay claim to foreign territory—the Spanish government to Argentina and the Ro man City Government to Spain. Above all, the American Indian tribal chiefs may reclaim all the Americas, including Argentina.

A Claim Deeply Rooted in Nationalism and Collectivism

The popular notion that the Malvinas are “ours” reflects a deeply rooted blend of nationalism and collectivism. In no sense of the word can an Argentine citizen claim ownership rights over the property of the islands. Even if his government were to rule the islands, and he would be taxed heavily to sustain the rule, he would have no property rights whatever. But he would be poorer indeed.

Long before the invasion the Argentinian government was spending considerable funds taken from Argentinian taxpayers and inflation victims to subsidize the 1700 Falkland Islands’ residents. It built an expensive runway at the Port Stanley airport, financed two weekly flights of big transport planes between the mainland and the islands, rendered airmail and air freight services, and installed an expensive radio system to guide the air traffic to and from the mainland.

But these expenditures were minuscule when compared with those the Argentinian government would have incurred if the islands had become Argentine. They can be surmised from the proposals submitted to the British government long before the invasion, billion dollar proposals that would have delivered the islanders into the grip of Argentine statism and socialism:

Establishment of a branch of the Banco de la Nación Argentina,

Establishment of a branch of the Caja

Nacional de Ahorro y Seguro,

Financial support for housing construction by the Banco Hipotecario Nacional,

Establishment of fish breeding stations by the Argentine Ministry of Culture and Education,

Installation of a radio station,

Establishment of an oceanographic research station by the Universidad Nacional,

Installation of a satellite station,

Installation of a government telephone and telegraph service,

Installation of a government breeding farm, slaughter house and cold storage plant.

And as if to inject nationalistic linguistic conflict the government proposed to establish a bilingual school managed by the Ministry of Culture and Education, create a professional training center and a school of arts and crafts. All that for 1700 islanders! No friend of individual freedom anywhere would want to extend such a system to any part of the world.

A Flawed Arrangement

To many Argentineans the present island system is naked colonialism and imperialism that should be abolished immediately. Of course, the terms are taken directly from the armory of Marxism-Leninism and imply the extension of the labor-contract system to foreign countries. Although most governments and their UN delegates assembled in New York may disagree, the labor-con-tract market system constitutes the most productive system on earth, bringing forth the highest wage rates and levels of living. The alternative is a political command system that assures misery and poverty for all.

And yet, in the heat of debate it must not be overlooked that the Argentinian people have good reason for complaints about the Falkland government. Throughout its 149 years of administration it has consistently denied basic human rights to all people, except natives, which has been exceptionally painful to Argentineans. Argentineans are not free to move about the islands, own real property, buy or build farms, houses, apartments, hotels, office buildings, or sail and fish in the waters of the islands. They are treated as alien outcasts in a country they consider their own.

The Japanese who could not conquer Hawaii in World War II are free today to move about Hawaii, to own real property, to buy or build hotels, office buildings, apartments, and whatever their hearts desire. They do not have political rights, but enjoy basic human rights that make political rights irrelevant and ira-material. Even aliens who enter the U.S. illegally are guaranteed “due process” under the law. In fact, a recent Supreme Court decision extended all constitutional rights to illegal aliens. That is, no government can make or enforce any law which abridges the privileges or immunities of residents, nor can any government deprive any person of his liberty or property without due process, nor deny anyone the equal protection of the laws.

Basic Human Rights

If the citizens of Argentina were to enjoy such basic human rights in the Malvinas, all causes for alienation and conflict would disappear. The issue of sovereignty over the islands becomes unimportant where the basic rights of every human being, regardless of race or nationality, are safeguarded. Sovereignty does not matter where every individual can move about freely without government permit, license or visa, where he can freely exchange his goods and services, engage in a business of his choosing, sell his labor or buy labor, own land and structures, or cultivate the soil. To paraphrase the British philosopher, John Stuart Mill, he is free to pursue his own good, in his own way, so long as he does not attempt to deprive others of theirs or impede their efforts to obtain it.

To return to the prewar conditions in the Malvinas is to perpetuate the danger of conflict and deny the basis for a permanent and peaceful settlement. Self-determination is flawed where it aims at denying basic human rights to everyone but a privileged few. Self-government for 1700 islanders is neither democratic nor peaceful when it deprives millions of neighbors of their human rights and impedes their efforts to pursue their interests.

The solution to the Malvinas crisis cannot be found in a mere change of sovereignty, or a United Nations trusteeship, or a multinational force that guards and guarantees the islands’ tranquility. Mrs. Thatcher’s plan of some kind of elected self-government for the islanders offers no lasting solution, nor does Argentine ambition of sovereignty which is state power. Lasting peace, which is the natural state of man and the desire of all the peoples, depends on a universal reduction of such powers. It springs from individual freedom.

Toward the Brink

Argentinian history, like any other national history, can only be understood as a history of ideas seeking realization through individual action. Political, social and economic ideas slowly filter into the minds and consciences of men and govern their actions. Ideas are men’s great guideposts that lift civilization or destroy it.

The intellectual history of Argentina has been similar to that of all other Western countries. Toward the end of the 19th century, the media of education and communication, the schools, churches, and political parties were teaching and preaching the virtues of nationalism, which is devotion to the interests of the nation and its government. Later they added the doctrines and theories of socialism in all its variations and colors.

By the time the Radical Party came to power, in 1916, most Argentineans were espousing Marxian notions of dialectical materialism, of class conflict and class wars, of labor exploitation by businessmen and capitalists, of concentration and monopolization. A few years later many welcomed Lenin’s line of thought about colonialism and imperialism. All classes of society, but especially the educated classes, were imbued with the urgent need of social and economic reform. Even those who passionately attacked world communism because of its atheism em braced the ideas of the Communist Manifesto and the program of the Communist International.

The generals, most of whom came from middle-class families, attended the same schools, belonged to the same churches, and were influenced by the same political parties as all their countrymen. Their social and economic views never differed one iota from those of others. Even their political faith in political salvation through strong leadership differed from that of party politicians only on the matter of who the savior was to be. They, too, believe in every point of the Communist Manifesto. When I interviewed the commanding general of the War Academy for senior officers, in April, 1982, he promptly rejected the suggestion of elementary courses in market economics and the private property order on grounds that “both sides must always be pre sented.” In short, he felt at sea without mainstream economics, which is socialist, Peronist, and Marxist.

Knowledge and education are the only cure for the political, social and economic diseases the modern world has engendered. But people who do not know and cannot find the disease cannot develop a remedy. If they, as if to make matters worse, prevent others from searching, the disease may indeed become fatal. But this has been the Argentinian policy for more than half a century. Public education on all levels has been state education, that is, by the state, of the state and for the state. Competing private and parochial schools have been severely restricted, regulated, and often even outlawed.

All Parties Propose Government Educational Programs

The educational programs of the political parties reveal a sad state of intellectual affairs. The important Radical Party (UCR), which has been in power longer than any other party, is proposing to raise educational outlays to 25 per cent of the government budget. It would make government education obligatory through first years of high school. Private education would be controlled severely and diplomas and licenses be awarded only by government institutions.

The Democratic Socialist Party (PSD), too, would boost government expenditures for government education, limit degrees, titles and licenses to state universities, and make all teacher training and professional education the exclusive function of the state. It differs from the UCR program only in that it would emphasize sex education in all schools.

The Popular Christian Party (PPC) would raise government expenditures by 25 per cent, reshape the public educational system to the needs of the community, grant state subsidies to parochial education, and restrict or outlaw all profit-oriented education.

The Intransigent Party (PI), while advancing a similar program, would introduce higher education without budgetary restraint or limitation.

The Progressive Democratic Party (PDP) would raise government expenditures for government education to 4 per cent of GNP, build enough schools to cover all national needs, and use the mass media to offer civic education to the general public.

The Integration and Development Movement (MID) would “fortify” government education and promote national culture in order to strengthen national traditions. (Cf. Ricardo Zinn, Argentina, Robert Speller & Sons, N.Y., N.Y., 1979, p. 187-189.)

There is not one political party in Argentina that favors a free exchange of ideas or open competition between different educational systems. No eminent politician, general of the armed forces, or leading clergyman openly urges a repeal of countless strangling restrictions and bureaucratic controls over the education of the people. The few voices for individual freedom are drowned out by the deafening propaganda for statism and government omnipotence.

Argentina is hovering on the brink of political and economic disaster. One-third of the Argentinian electorate long for a return of Peronism, another third are eager to cast their votes for the Radical Party, and most others would lend their support to democratic socialism, Christian socialism, or even communism. But it would be a dreadful mistake to wallow in misery and despair. After all, Argentina is a Western society that springs from the roots of Judeo-Christian civilization, with divine sparks of irrepressible individualism. A few clear voices are heard throughout the land. No political force on earth can forever suppress those voices.